Thanks for watching and here are today's economic lessons:
Wednesday, 6 May 2009
Update: Episode 8 is here.
Thanks for watching and here are today's economic lessons:
Thanks for watching and here are today's economic lessons:
The law of large numbers. Many things are highly predictable when you have enough data. In this case it's sales appointments. Call a hundred companies and you will get three appointments (your ratios may vary). Call twenty and you've a good chance of getting none.
Trust in zero-sum games is very hard to enforce. That little backstabbing in the boardroom shouldn't have been a surprise even though it came out of the blue.
Utility functions are not smooth. The difference between £800 and £500 is minuscule compared to the difference between £500 and zero. There are discontinuities at important points, and zero is the most important of all.
As always, a little space for those who haven't seen the programme yet and don't want to know who wins.
10:30 Time for them to advertise the application forms for the next series. Do they really wait until episode 7 of this series before recommissioning it?
So who's left? Eight people: Lorraine, Yasmina, James, Ben, Mona, Kate, Howard and Debra. What are your votes? Ben's been on thin ice a few times and so has Debra. I can't quite see either of them saving themselves. Mona seems excellent so far; James seems like Sir Alan's type. Howard is either made of Teflon, or just keeps winning tasks. I have barely seen his face all series.
10:29 About a quarter of the audience voted to save him. And he saw right through my allegation about his mother. He claims that she voted to have him fired!
10:28 And the panel's vote: 2-1 against Philip. Cute Kavita likes him! Is he that good-looking?
10:27 "Direct eye contact" for Mark Frith is the key to successful sales. Not a bad insight, actually.
10:26 Mona was the star of this episode and must be a good possibility for series winner.
10:25 A lovely look between James and Ben in the replay of the arrival at the service station. I quite like them both now. James is a good possibility to win - but to be honest, most of the remaining candidates apart from Debra look possible.
10:24 A final apology to try and win the audience vote. But does anyone believe he means it? The audience's self-aware "aaaahhhh" will probably cauterise any incipient sympathy.
10:22 Philip's fatal flaw: hubris. Then again, is there ever any other?
10:20 Philip has the gall to defend Pantsman. Then again, I think I defended it myself at the time.
10:15 We aren't learning a great deal from You're Fired tonight. Sorry for the inane commentary.
10:14 Not too much traffic here tonight - is everyone watching the Champions' League? I suppose I should go and see who is winning. Or has won.
10:13 But I suppose there's a valid contrast to make between personal and business objectives.
10:12 Some very cute pictures of Philip and Kate falling in love, but not much relevance to anything.
10:09 Philip claims that they went through the Yellow Pages several times and couldn't get any appointments. But we already know they made fifteen calls in an afternoon! That's not only negligent but also dishonest.
10:08 Ruby Wax compares Lorraine to Margaret Thatcher and Philip to a shallow high-school boy. Harsh (on Lorraine) but fair (on Philip). Though maybe Lorraine wouldn't mind.
10:07 A bit of self-deprecation from Philip in an attempt to rescue his reputation. Bit late, isn't it?
10:04 A nice panel this time. I must look up who that Kavita person is.
10:03 I thought You're Fired was broadcast live, but the announcer just warned about strong language. I guess it must have been filmed earlier today (presumably no earlier, for risk of leaks).
10:00 Like Anna Pickard at the Guardian, I am overjoyed that Philip is gone - and like her, it's going to be great to see him flounder on You're Fired. I know already how many green signs are going to be held up in the audience at the end. It's the same as the number of mothers he has.
9:59 I managed to avoid seeing which way he was pointing this time. But I can exclusively reveal that next week, someone...is going to get fired.
9:58 Next week's task looks quite original. "Rebrand Margate"! Nice.
9:57 That's the first time I've had this level of dislike for a candidate this series. I am not surprised but I am quite happy.
9:56 Philip's out! He mutters "joke" under his breath as he goes, but clearly he's not joking.
9:55 He's pretending to vacillate, but it seems clear.
9:54 I've just remembered which direction Sir Alan was pointing in last week's "You're fired!" clip. I think I know who's going.
9:53 A sparkling little dagger appears in Kate's hand. She quickly switches away from Lorraine and sticks it in Philip's back - to prove that she doesn't have a "personal" loyalty to him.
9:52 Kate's turn to admit a weakness. No surprise that Philip doesn't jump in to criticise her.
9:51 Philip is arguing hard with Alan Sugar. That can't be a good strategy, surely?
9:48 And Kate and Philip come back in. I hope Philip goes, but economically I am not sure if there's a clear decision to be made.
9:48 Philip is behaving like a child. Utterly sarcastic and completely offensive.
9:45 Lorraine playing an interesting game: she admits a mistake - a good technique in many situations - but Philip takes advantage with "it's not the first time". This is more like politics than economics.
9:44 Interesting bit of experimental evidence: Alan sent out his own people to call a bunch of stores to make test appointments, and they succeeded in making them.
9:42 Then again, Kate and Philip are the burgeoning romance of the show, and maybe Lorraine would be in telegenic danger if she brought them in. I'm glad I'm not making that choice.
9:41 Lorraine sold £800-odd and Yasmina £500. Game theory time: Lorraine is going to take Ben into the room, and therefore has to choose between Philip and Kate. She should take Philip and Kate because Ben at least has a defence; but if she's bringing Ben out of dislike, she ought to pick Philip because Kate is more likely to be retained for TV value.
9:40 Confirmation: Ben, Kate and Philip all sold nothing. Ben will no doubt be in the boardroom for bolshiness and complain that he made the appointment which Lorraine wasted.
9:39 Ignite sold £1300 - at least they sold on both days, but clearly an abject failure to generate volume. That's Lorraine's team, of course.
9:38 Empire sold £4501 (all on the second day).
9:37 Minor arguments in the boardroom - betrays Kate's lack of confidence in their ability to win the task.
9:36 The (not very well) hidden secret in this task is the difference between picking the best generic product, and the best product for a specific buyer. Mona's team did not sell any products to the two large retailers that had been booked for them.
9:33 A bit of theory about the difference between continuous and discrete decisions. If Sir Alan has a continuous utility function, he won't see much difference between no sales and the £300 that Lorraine and Yasmina got. But utility functions are always discontinuous at points, and there's a huge chasm between zero and £300, or even £1.
9:32 In front of the lovely Albert Dock with our first Nick Alert! He's warning Ben, Katy and Philip that they better not show up in the boardroom with nothing. Quite right.
9:31 Is it time for a prediction yet? Mona's team seems to be doing pretty well - with only a minor disagreement between Howard and Debra slowing them down. Lorraine is in danger, but I can't yet see who she'll bring into the boardroom.
9:28 Tragedy of the commons, corporate version: shared responsibility means nobody is motivated to get things done. Ben made an appointment for Lorraine and so he doesn't feel the need to get any sales of his own.
9:26 Big gamble here: Lorraine and Yasmina are at the same pet retailer as the other team (what a coincidence) trying to sell 20,000 of their "cat playhouse". The shop is not impressed and orders fifty.
9:24 The "lover's lead" - a lead letting two people walk a dog together - has gone down well at a big pet retailer, but the team (Mona's) has let them get away with a very small order. Mona negotiated much better in the camping shop earlier.
9:21 Lorraine's telesales team have made one appointment. I'm not aware of a theory governing the distribution of information and its correlation to sales. But I am aware of what a team looks like when it's wasting time, and Lorraine fighting with Yasmina about who'll do the pitch looks pretty like it.
9:18 In neoclassical economic theory, everyone knows every product option available to them and can instantly optimise their utility across all of them. In the real world, not so much. Sales pitches and retailer branding are key ways for people to find their way to products in a world of bounded rationality.
9:15 Lorraine doesn't get a Margaret Alert - or a Nick Alert - but she doesn't think the presentation went very well anyway.
9:14 Margaret Alert! Margaret has pointed out that Mona's team have burned their chance to sell to two big retailers by choosing products that are incompatible with their shoppers. Never ignore the Margaret...
9:12 Some bizarre products - I woudn't be surprised to see some of these on Dragon's Den. Maybe there's a crossover programme for next year's series.
9:11 At least Lorraine's team is looking at margins - that's going to be important to the retailers.
9:10 And here it is... Lorraine is picking an 'artistic' product over the heads of her team who don't fancy trying to sell it.
9:09 Lorraine (Cassandra) is laying down the law about how she's going to manage the team. She will make the decisions and the rest better obey. So no doubt we'll see her making a wrong decision in the near future.
9:07 The economics here is about locating consumer surplus - products that provide high value relative to their price. And about successfully communicating that fact to buyers. As Scott Sumner would point out, they need to disprove the efficient markets hypothesis - as anyone in sales has to do every day.
9:05 Twelve companies will pitch their products to the teams - they will pick two, and sell them to retailers in Manchester and Liverpool.
9:04 The teams are packing for a journey - no doubt hoping for a visit to Morocco like last year. We know better, of course. Is this an example of Taleb's Black Swan theory? Trying to make an inductive prediction from insufficient data.
9:03 After the appalling inaccuracy of my predictions last week, let's see if I can do better today.
9:00 Welcome back, to regular readers and visitors from the Guardian's charming liveblog.
I'm live blogging The Apprentice again here - despite the objections of one particular reader who (understandably) is impressed with neither the programme nor any of the candidates. J, I hear you - but the show must go on. Once again I'll be picking out where the candidates either illustrate - or violate - the predictions of economics.
Another reader writes to ask how rational Alan Sugar is. On the surface, quite rational: he will often fire a potentially better employee while retaining the candidates who are 'good TV', but he always has the option of keeping his preferred candidate in place throughout. Whoever he has picked (and there's an excellent chance that he has, maybe subconciously, chosen the winner already) gets to stay in, and even if they objectively lose in the final task - as happened in the last series - he can still fire the other person.
Why do I think he may have chosen the winner? A very interesting experiment was carried out on students at Harvard by Ambady and Rosenthal a few years ago. They showed students several minutes of video footage of professors who were teaching courses that year. The students were asked to rate the quality of teaching of the professors against fifteen criteria. When the ratings were compared to the ratings given by students after a whole semester of teaching, they matched almost exactly. What's astonishing is that when the videos were cut back to 10 seconds, the ratings were exactly the same; when cut to 5 seconds - and then when cut to just 2 seconds and without any sound, the ratings were again the same as those of students who had spent a whole semester being taught.
What does this tell us? That all the information you use to judge a person's competence - at least as a lecturer - is gathered within just the first two seconds of exposure. Makes you wonder whether sitting through twelve episodes is really necessary. But it's fun, isn't it?
And a forthcoming treat - I am hoping to arrange an interview here on the blog with a candidate from a previous series - but no clues until it's confirmed. Keep watching and see you at 9pm!